Kroger and Albertsons Seal $25B Merger Agreement

reprints


Two national grocery store chains will be under the same roof after Albertsons agreed to Kroger’s acquisition offer of $34.10 per outstanding share, a value of about $24.6 billion.

Kroger will also be assuming $4.7 billion of Albertsons net debt in the deal, according to a joint press release, and Albertsons will be paying a $4 billion cash dividend of $6.85 per share to its investors by Nov. 7. Albertsons, which went public in June 2020, saw its stock prices rise as high as $36 per share at its height but stood at about $26 per share as of Friday afternoon.

SEE ALSO: City National Bank Provides $32M for SoCal Industrial Parks: Sources

“Albertsons Companies. brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores,” Rodney McMullen, Kroger CEO said in a statement. “This merger advances our commitment to build a more equitable and sustainable food system by expanding our footprint into new geographies to serve more of America with fresh and affordable food and accelerates our position as a more compelling alternative to larger and nonunion competitors.”

But it isn’t a done deal yet.

While executives have agreed on the terms, shareholders will need to submit their consent to the deal by Oct. 18. However, shareholders who own more than a majority of Albertsons stock have already given the transaction a green light. A letter of consent is all that is needed to close the deal in early 2024 due to regulatory clearances.

“We have been on a transformational journey to evolve Albertsons Companies. into a modern and efficient omnichannel food and drug retailer focused on building deep and lasting relationships with our customers and communities,” Vivek Sankaran, CEO of Albertsons, said in a statement. “Given the similarities in the culture and values at Kroger and Albertsons Companies., I am confident that the combination will also have a positive impact on our associates and the communities we are proud to serve.”

McMullen will serve as CEO of the newly created public company that will manage the two brands, simply described as “SpinCo,” an obvious working title at this stage in the game. 

Altogether, the two entities manage a total of 710,000 associates across 4,996 stores, 66 distribution centers, 52 manufacturing plants, 3,972 pharmacies and 2,015 gas stations, according to the companies. About 290,000 of those associates are employed by Albertsons, which on its own has a combination of 2,273 stores, 1,720 pharmacies, 402 gas stations, 22 distribution centers and 19 manufacturing facilities.

Mark Hallum can be reached at mhallum@commercialobserver.com.